HudBay CEO Eyes More Deals Beyond Augusta Bid: Corporate Canada – by Liezel Hill (Bloomberg News – March 11, 2014)

http://www.businessweek.com/

HudBay Minerals Inc. (HBM), the 87-year-old company making a C$334 million ($301 million) hostile bid for a smaller Canadian copper-mine developer, is looking for more acquisitions even if it doesn’t pull off that deal.

HudBay made its all-stock offer on Feb. 9 for Augusta Resource Corp. (AZC), the owner of the Rosemont copper project in Arizona. The bid was 16 percent less than Augusta’s closing price yesterday in Toronto, indicating investors are anticipating a higher offer. That’s also the widest discount for any current Canadian takeover, data compiled by Bloomberg show.

While HudBay recently started up two Canadian mines and is close to completing a new Peruvian operation, it’s not yet clear where growth will come from further in the future, according to Chief Executive Officer David Garofalo. Hudbay is still a few years away from developing a sustainable pipeline, he said in a March 4 interview at Bloomberg’s Toronto office. “We’re ready to move onto other things whether or not we get Rosemont,” he said.

Garofalo, 48, a former chief financial officer at Canadian gold producer Agnico Eagle Mines Ltd., took up his current post in July 2010, more than a year after HudBay abandoned an agreement to buy Canadian competitor Lundin Mining Corp. Garofalo said that when he became CEO, he found the Toronto-based company’s project pipeline was empty, while two of its three mines were nearing the end of their lives.

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More disciplined M&A on tap for gold miners in 2014 – by Alisha Hiyate (Mining Markets – March 10, 2014)

http://www.miningmarkets.ca/

When the market was hot from 2010 through 2012, mid-tier Alamos Gold (TSX: AGI; NYSE: AGI) stayed on the sidelines of an otherwise active M&A scene because valuations for companies were “through the roof,” says the company’s president and CEO, John McCluskey.

“The only way you could step into that market and feel at all comfortable is if you felt gold was going to US$3,000 an oz. or something – which we did not.”

More recently, as the gold price started to cool, Alamos found valuations were at last coming down to more reasonable levels. Last year, the debt-free company, which produced 190,000 oz. of gold at its Mulatos gold mine in Mexico in 2013, was involved in three takeover bids.

However, despite the decline in valuations since 2012, McCluskey says it’s still difficult to find compelling transactions.

“Generally we’re trying to acquire public companies and there’s a sufficient amount of information in the public realm for us to do a desktop analysis,” he says.

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UPDATE 2-Barrick to sell part of its stake in African Barrick – by Euan Rocha (Reuters U.S. – March 10, 2014)

http://www.reuters.com/

(Reuters) – Barrick Gold Corp said on Monday it plans to sell about 13.5 percent of its holdings in its majority-owned subsidiary African Barrick Gold .

Toronto-based Barrick, which currently owns a roughly 303.25 million shares in African Barrick, is selling 41 million shares. The gold miner will still own a majority stake of just over 60 percent in the Africa-focused miner following the close of the transaction.

Barclays analyst Farooq Hamed believes the stake sale will result in proceeds of just over $200 million that will help bolster the gold miner’s balance sheet and allow it to trim its debt load.

The move is the latest attempt by the world’s largest gold miner to trim its asset base and reduce its exposure to higher cost assets. In 2012, the company attempted to sell a part, or all of its interest in African Barrick Gold to China National Gold Group, but those talks fell apart last year.

The company has since gone on to sell a number of non-core assets. In January, Barrick Gold agreed to sell its Kanowna gold mine in Western Australia to Northern Star Resources for A$75 million.

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‘Dr. Copper’ sinks to eight-month low amid concerns about China – by Peter Koven (National Post – March 11, 2014)

The National Post is Canada’s second largest national paper.

Copper goes by the nickname “Dr. Copper” because history shows the red metal is a leading indicator of the global economy’s health. Unfortunately, it hasn’t been telling us anything good lately.

The red metal has recently been in a swan dive, dropping close to 10% since mid-February and falling steeply in the past couple of trading days. The key futures contract on Monday briefly sunk below US$3 a pound, its lowest level in eight months.

As is usual with commodities, China appears to be the culprit. Investors were spooked by recent Chinese trade data that showed a stunning 18.1% year-over-year drop in exports in February. That left a trade deficit of US$23-billion.

“It was a big number that probably surprised people,” said Kerry Smith, an analyst at Haywood Securities.

There was already a lot of concern in the market about the Chinese economy, particularly after its first-ever corporate bond default last week. But copper, much like China, has shown remarkable resilience in recent years.

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RIP commodity supercycle, 2002-2014 – by Scott Barlow (Globe and Mail – March 11, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Metals prices in China were crushed Monday as the country’s economic numbers continued to drive nails into the coffin of a global commodity supercycle that has enriched so many Canadians since 2002.

Copper prices in Shanghai fell 5 per cent Monday after the government released trade statistics showing an 18.1-per-cent year-over-year decline in exports. The copper price now stands 8.6 per cent below highs hit on Feb. 17. Commodity price carnage was also apparent in iron ore. The spot price fell 8.3 per cent Monday, and is now lower by 20 per cent year to date.

The export data was extremely disappointing to economists who had predicted a 7.5-per-cent increase. Seasonal factors were definitely in play – Chinese New Year celebrations always skew the early-year data. Even so, the number is easily soft enough to confirm the economic weakness suggested by a March 2 PMI report that showed a contraction in manufacturing activity.

Economists expect that China’s gross domestic product growth will reach the government target of 7.5 per cent this year, so at first glance the recent volatility in commodity markets makes little sense.

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COMMENT: Chilean court cancels Pascua-Lama fine, retains suspension – by Marilyn Scales (Canadian Mining Journal – March 10, 2014)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

As we are used to hearing – there is good news and bad news. This time Toronto’s Barrick Gold is on the receiving end of both, thanks to the environmental court in Chile. At issue is the future of the expensive Pascua-Lama gold project that straddles the Chile/Argentina border.

Last week, Chile’s second environmental court annulled the fines imposed by a local environmental regulator (SMA). The amount is small – $16 million compared to the projected $8.5-billion cost of the project. The higher court cited “errors and illegalities” in the SMA’s resolution, and removed the fines. The SMA will now consider each of 23 charges separately, and readers can expect that the fines will be re-imposed.

That was the good news. Now the bad. At the same time the court upheld the suspension of work order imposed on the Chilean portion of Pascua-Lama. The only project Barrick has been allowed to work on is the water management system.

The Pascua-Lama project has been one of the most difficult any mining company tried to develop.

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Rejected in 2008, Kemess gold-copper mine proposal on table again – by Wendy Stueck (Globe and Mail – March 10, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER — A mine rejected in 2008 on environmental grounds is back in play, with a different company at the helm and plans for an underground, rather than an open-pit, operation.

Toronto-based AuRico Gold filed a project description for the Kemess Underground Mine Project with the B.C. Environmental Assessment Office last month, reviving plans for a gold-copper deposit about 250 kilometres north of Smithers and about 6.5 kilometres north of former producer Kemess South Mine, which was in production from 1988 to 2011.

In the years leading up to Kemess South being depleted, former owner Northgate Minerals made plans to extend operations by developing the nearby Kemess North deposit. Plans at the time called for disposing of tailings and waste rock from expanded operations in Duncan Lake, also known as Amazay Lake.

That plan did not sit well with aboriginal groups that had historic and cultural connections to the lake. In 2007, a federal review panel concluded Kemess North as it was then designed was not in the public interest “because of significant adverse environmental, social and cultural effects, some of which may not emerge until many years after mining operations cease.”

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Expert Mining Panel Discusses Possibility Of Reaching ‘Peak Discovery’ – by Alex Létourneau (Kitco News – March 10, 2014)

http://www.kitco.com/

(Kitco News) – During the 82nd Prospectors and Developers Association of Canada convention in Toronto last week, Exploration Insights founder Brent Cook rounded up some mining heavyweights to look into the possibility of having reached peak discovery in the mining industry.

Kitco News’ informal panel included Catherine McLeod-Seltzer, chairman of Bear Creek, Alex Davidson, director with Yamana Gold, Miles Thompson, CEO of Lara Exploration.

While the guests covered a range of topics linked to where the mining industry is at, and where it could be heading, the idea that the mining industry will be a low-grade driven sector moving forward triggered a discussion.

“There’s always a change going on in the mining industry,” Davidson said. “We get smarter about where we explore, we can look from further away, we can look in different countries, our risk tolerance is a gazillion times more than it was 20 or 30 years ago.

“So I think we are going to find more deposits, they may be deeper which would require higher grade, or we’ll refine the mining methods to get cheaper mining methods, but I think there’s as much potential, in certain areas, as there ever has been.”

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Allana Potash opening Ethiopian mine in the hottest place on earth – by Stephanie Findlay (Canadian Business Magazine – March 6, 2014)

http://www.canadianbusiness.com/

Keeping costs low is key amid potash price slump

Lately, things haven’t been looking good for potash producers. Last summer, Uralkali, one of the biggest producers of the potassium fertilizer, killed its partnership with competitor Belaruskali in favour of boosting output, fuelling oversupply fears among investors and driving down prices. The situation has hardly improved since then. On Jan. 30, fourth-quarter profits at Potash Corp. of Saskatchewan, another large producer, dropped 46%, a result, said the company, of the “challenging pricing environment.”

Allana Potash Corp., the Canadian developer of a $718-million potash mine in Ethiopia, believes it can buck the trend. While other mines are shelving development projects because of the lower prices, Allana is going “full speed ahead” with its Ethiopian project, says Richard Kelertas, vice-president of corporate development at Allana.

The company’s secret? Kelertas says that the mine, set to begin producing in late 2015, will have easy access to the booming Chinese and Indian markets, and much lower production costs, making it profitable despite the price slump.

Allana’s mine is located in the remote Danakhil depression, a scorching-hot salt plain where temperatures often soar above 45°C, and where potash is close to the surface. Allana will do solution mining—cheaper than the open-pit or shaft mining done by its competitors.

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JSE still a world-class market, investment paradigm shift needed – by Henry Lazenby (MiningWeekly.com – March 7, 2014)

 http://www.miningweekly.com/page/north-america

TORONTO (miningweekly.com) – The Johannesburg Stock Exchange (JSE) is still by any measure a world-class stock exchange, and should be the mining mecca of the mining industry, Sasfin Capital head of corporate finance Noah Greenhill said this week.

Speaking to Mining Weekly Online in his capacity as official JSE representative during the Prospectors and Developers Association of Canada’s recent convention, Greenhill pointed to several of the exchange’s strengths, such as well established regulations, excellent clearing and settlement systems, and plenty of available capital in South Africa – once a mining investment powerhouse.

The latest World Economic Forum ‘Global Competiveness Report’ ranked South Africa first out of 148 countries for regulation of securities exchanges for the fourth consecutive year. This, together with several other elements of the report, pointed to the country’s exchange as a sound environment in which to invest.

“It’s a no-brainer. It is not that there is no capital for investment, there is rather a lack of the propensity to take investment risk,” he said.

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Global bourses challenge TSX’s junior mining supremacy – by Rachelle Younglai (Globe and Mail – March 10, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

South Africa, Australia and London are trying to convince more mining companies to list on their exchanges, an effort that poses a threat to Canada’s dominance with junior miners.

Hundreds of explorers and small miners have flocked to the Toronto Stock Exchange and the Toronto Stock Exchange Venture because they are friendly to the industry and an easy place to raise capital. But the landscape is shifting as Canada’s competitors make a bigger effort to attract mining companies.

“For a long time there was a perception that if you listed in North America, you would attract a higher multiple. But that’s not the case anymore,” said Eddie Grieve, senior manager of the Australian Securities Exchange’s listings business development.

Mr. Grieve describes the rivalry between the Canadian and Australian exchanges as friendly, as the two countries have similar resource-based economies and histories of mining.

The Australian exchange started targeting Africa about five years ago and it has paid off.

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Canadian miner’s quest for gold meets politics in the Amazon jungle – by Stephanie Nolen (Globe and Mail – March 8, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

RESECA, BRAZIL — Brazil, Mark Eaton likes to say, will be the place where he builds something – where he has an impact, where he leaves a legacy. Standing on the grassy riverbank in the Amazon basin where he hopes to build Brazil’s largest gold mine, he foresees a brilliant future.

The Brazilian present, however, is somewhat less appealing.

Mr. Eaton is red-faced and sweating in the damp midday heat. He struggles to make himself heard over the pounding music at his staff Christmas party, then frowns dubiously at the heavily salted grilled meat heaped on a plate in front of him. He cannot follow the Portuguese conversation bubbling around him. When a huge rain-forest wasp stings his hand, his jovial façade crumbles for a moment. He emits half an expletive before managing to restore the tight smile to his face.

A few days before the Christmas party, Mr. Eaton’s company, Belo Sun Mining Corp., obtained an environmental licence to work here, two hours by boat down the Xingu River from the city of Altamira. Obtaining that licence, after a bureaucratic process that dragged on over three years, gave Mr. Eaton and his colleagues something to celebrate.

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PDAC 2014: Neighbours demand share of mining cash – by Ashley Renders (National Post – March 6, 2014)

The National Post is Canada’s second largest national paper.

People living in communities near valuable mineral deposits often complain that they don’t receive enough of the economic benefits associated with them. But as the call for greater transparency in the mining sector gains momentum worldwide, they are increasingly holding their own governments responsible, rather than just the mining companies.

They say if miners want to operate in more stable investment environments, they need to encourage host governments to play by the rules and engage with local community members.

The Canadian mining industry seems to agree. Earlier this year, the Prospectors and Developers Association of Canada (PDAC) and the Mining Association of Canada (MAC) teamed up with transparency organizations to ask the provincial securities commissions to make it mandatory for companies listed on Canadian stock exchanges to disclose how much they pay governments.

Natural Resources Minister Joe Oliver told the PDAC convention on Monday that the federal government wants to work with the provincial and territorial securities commissions to implement mandatory reporting standards on a project-by-project basis. If the securities commissions don’t implement these standards, the federal government will put its own legislation in place by April 1, 2015.

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First Nation businesses tap into potash opportunities – by Kim Smith (Global Regina – March 5, 2014)


http://globalnews.ca/regina/

REGINA – The plan was to create opportunities for First Nations in employment, business and community development – but according to BHP Billiton Potash, its success is less about recruitment and more about building relationships.

Last year, the company signed an agreement with three Saskatchewan First Nations – Kawacatoose, Day Star and Muskowekwan – to create employment opportunities.

“You have to be part of the community needs and work with them in addressing those needs,” said BHP Billiton Potash’s Alex Archila following a luncheon organized by the Canadian Council for Aboriginal Business.

“If you look at a business opportunity to just make money, we don’t believe that will be sustainable.”

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B.C. Government Support for New Prosperity Mine Sends Confusing Message To First Nations – by Adam Olsen (Huffington Post – March 7, 2014)

 http://www.huffingtonpost.ca/

Adam Olsen is the interim leader of the BC Green Party.

The Canadian government has rejected the New Prosperity Gold & Copper Mine southwest of Williams Lake, B.C. for the second time. Federal Conservative Environment Minister Leona Aglukkaq announced that she, like her predecessor Jim Prentice, had turned down the mine proposal concluding the “project is likely to cause significant adverse environmental effects that cannot be mitigated.”

No doubt the announcement caused a collective sigh of relief from the Tsilhqot’in and Secwepemc Nations who have spent more than two decades opposing the project. The Federal Review Panel’s final report to the government last October found New Prosperity would “adversely affect” the local First Nations way of life and that the impact would be “significant” and “could not be mitigated.”

Despite the fact that the Tsilhqot’in and Secwepemc are opposed to the New Prosperity mine, the B.C. Liberal government continues to support the project. This is both profoundly troubling and inconsistent with their commitments to First Nations.

In the last few weeks alone there has been no shortage of B.C. Liberal rhetoric about the importance of building relationships and partnerships with First Nations that are founded on respect:

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